The following is the balance sheet of Weak Ltd on 31-3-2003:
Liabilities Assets
20,000 Equity shares of Rs.10 each 2,000,000
Patents 400,000
500 10% Pref. Shares of Rs.100 each 150,000
Buildings 2,000,000
8% Debentures 800,000
Machinery 1,300,000
Creditors 3,300,000
Stock 80,000
Outstanding expenses 20,000
Debtors 55,000
Profit & loss A/c 950,000
7,000,000
With a view to reconstruct the company, it is proposed:
(i) To reduce Equity share paid up amount by Rs.9 each.
(ii) To reduce 20% Preference shares by Rs.40 each.
(iii) To reduce 8% Debentures by 10%.
(iv) To reduce Trade creditors claim by one third.
(v) To reduce machinery by Rs.60,000.
(vi) To reduce inventory by Rs.10,000.
(vii) To provide Rs.15,000 for bad debts.
(viii) To write off all the intangible assets.
Pass journal entries to give effect to the above scheme and show the company's balance sheet after reconstruction.